Historically, business R&D spending and patent filings have moved in parallel with GDP, slowing markedly during the economic downturns of the early 1990s and early 2000s. Recent evidence, based on corporate reports from the first quarter of 2009, confirms this is already happening, with R&D spending declining in many cases. US venture capital investments plunged 60% in the first quarter of 2009 and the same is true in Europe and in China. Patent applications are down. Incentives to develop a greener economy have also been weakened by the crisis, it says.

The report urges governments and business to limit cutbacks in spending on R&D and innovation, and mitigate as far as possible the negative impact of the crisis on innovation. It points to the governments of Finland in the early 90s and Korea in the early 2000s which both increased investment in R&D during those downturns and the role this played in making their economies more competitive and innovative.

Economic crises are also historically times of industrial renewal and creative destruction. Supporting firms and industries that do not have a viable business model will thwart the restructuring required for more sustainable growth. The focus on innovation-related stimulus measures also showcases how economic recovery packages deployed today can help prepare future growth – including in the area of green technologies.

Separately, the issue of innovation and sustainable growth was discussed at its annual OECD Forum on Tuesday 23 June. Andrew Wyckoff, OECD Acting Director for Science, Technology and Industry, presented the report’s findings during the panel discussion.